Over the past years, most companies decreased their costs of goods sold (‘COGS’). However, mostly this is not the case for the sales, general and administrative (‘SG&A’) expenses. The following graph depicts the SG&A and COGS of the S&P500 index between 1998 and 2008.

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The SG&A slope shows only a marginal decrease. Too bad, at Bridgewater Consulting we know that a well structured cost reduction program can save your company tens of thousands. Key to this approach is the question: how to reduce costs, not how much. If your company focuses on the short-term, it will try to diminish costs by a certain percentage. On the other hand, if you focus on the long-term, your company will look beyond the current situation and cost reduction opportunities open up.

External benchmarks matter. Too often we see CFO’s who believe their current cost situation is ‘optimal’. That is, until we discover their situation is not so efficient after all and then we advise them other options.

Categories : Studies | Tags : General expenses | 1 commentaire associé